§ 149. Office of Strategic Capital

• (a) There is in the Office of the Secretary of Defense an office to be known as the Office of Strategic Capital (in this section referred to as the “Office”).
• (b) The Office shall be headed by a Director (in this section referred to as the “Director”), who shall be appointed by the Secretary from among employees in Senior Executive Service positions (as defined in section 3132 of title 5 ), or from outside the civil service who have successfully held equivalent positions.
• (c) The Office shall—
  • (1) develop, integrate, and implement capital investment strategies proven in the commercial sector to shape and scale investment in critical technologies and assets;
  • (2) identify and prioritize promising critical technologies and assets that require capital assistance and have the potential to benefit the Department of Defense; and
  • (3) make eligible investments in such technologies and assets, such as supply chain technologies not always supported through direct investment.
• (d) In the case of an eligible investment made through a direct loan, not less than 80 percent of the total capital provided for the specific technology to be funded by the investment shall be derived from non-Federal sources as of the time of the investment.
• (e)
  • (1) To the extent and in such amounts as specifically provided in advance in appropriations Acts for the purposes detailed in this subsection, the Secretary of Defense, acting through the Director, may carry out a pilot program under this subsection to provide capital assistance to eligible entities for eligible investments to develop technologies that support the duties and elements of the Office and meet the needs of the Department of Defense.
  • (2)
    • (A) An eligible entity seeking capital assistance for an eligible investment under this subsection shall submit to the Director an application at such time, in such manner, and containing such information as the Director may require.
    • (B) The Director shall establish criteria for selecting among eligible investments for which applications are submitted under subparagraph (A). The criteria shall include—
      • (i) the extent to which an investment supports the national security or economic interests of the United States;
      • (ii) the likelihood that capital assistance provided for an investment would enable the investment to proceed sooner than the investment would otherwise be able to proceed; and
      • (iii) the creditworthiness of an investment.
  • (3)
    • (A)
      • (i) To the extent and in such amounts as specifically provided in advance in appropriations Acts for the purposes detailed in this subsection, the Director may provide loans or loan guarantees to finance or refinance the costs of an eligible investment selected pursuant to paragraph (2)(B).
      • (ii)
        • (I)
        • (II) The final maturity date of a loan provided under clause (i) shall be not later than 50 years after the date on which the loan was provided.
        • (III) A loan provided under clause (i) may be paid earlier than is provided for under the loan agreement without a penalty.
        • (IV)
        • (V) The Director may sell to another entity or reoffer into the capital markets a loan provided under clause (i) if the Director determines that the sale or reoffering can be made on favorable terms.
        • (VI) Any loan guarantee provided under clause (i) shall specify the percentage of the principal amount guaranteed. If the Director determines that the obligor of a loan guaranteed by the Department of Defense defaults on the loan, the Director shall pay the holder, or such other party, as specified in the loan guarantee agreement.
        • (VII) The Director shall establish a credit rating system to ensure a reasonable assurance of repayment. The system may include use of existing credit rating agencies where appropriate.
        • (VIII) Loans and loan guarantees provided under clause (i) shall be subject to such other terms and conditions and contain such other covenants, representations, warranties, and requirements (including requirements for audits) as the Secretary determines appropriate.
        • (IX) Loans and loan guarantees provided under clause (i) shall be subject to the requirements of the Federal Credit Reform Act of 1990 ( 2 U.S.C. 661 et seq.).
    • (B) Subject to appropriations Acts, the Director may provide technical assistance with respect to developing and financing investments to eligible entities seeking capital assistance for eligible investments and eligible entities receiving capital assistance under this subsection.
    • (C)
      • (i) To the extent and in such amounts as specifically provided in advance in appropriations Acts for the purposes detailed in this subsection, the Director shall provide to an eligible investment selected pursuant to paragraph (2)(B) the amount of capital assistance necessary to carry out the investment.
      • (ii) All financial transactions conducted under this subsection shall be conducted in United States dollars.
  • (4) The requirements of subsection (d) shall apply to eligible investments under this subsection.
  • (5)
    • (A)
      • (i) There is established in the Treasury of the United States a Department of Defense Credit Program Account to make and guarantee loans under this subsection in accordance with section 502 of the Federal Credit Reform Act of 1990 ( 2 U.S.C. 661a ).
      • (ii) The Credit Program Account shall consist of—
        • (I) amounts appropriated pursuant to the authorization of appropriations; and
        • (II) fees deposited under subsection (f)(2).
    • (B) To the extent and in such amounts as specifically provided in advance in appropriations Acts for the purposes detailed in this subsection, the Director is authorized to pay, from amounts in the Department of Defense Credit Program Account—
      • (i) the cost, as defined in section 502 of the Federal Credit Reform Act of 1990 ( 2 U.S.C. 661a ), of loans and loan guarantees and other capital assistance;
      • (ii) administrative expenses associated with activities under this subsection;
      • (iii) project-specific transaction costs; and
      • (iv) the cost of providing support authorized by this subsection.
  • (6) The Secretary of Defense may prescribe such regulations as the Secretary determines to be appropriate to carry out this subsection.
  • (7) Not later than the first Monday in February of a fiscal year, the Secretary of Defense shall submit to the congressional defense committees an annual report describing activities carried out pursuant to this subsection in the preceding fiscal year and the goals of the Department of Defense in accordance with this subsection for the next fiscal year.
  • (8) The Secretary of Defense shall notify the congressional defense committees not later than 30 days after a use of loans, loan guarantees, or technical assistance under this subsection.
  • (9)
    • (A) The authority of the Director to make new loans and provide new loan guarantees under subparagraph (A)(i) of paragraph (3) shall expire on October 1, 2028 . Any loans or loan guarantees provided under such subparagraph that are outstanding as of such date shall continue to be subject to the terms, conditions, and other requirements of this subsection.
    • (B) The authority of the Director to provide technical assistance to eligible entities under subparagraph (B) of paragraph (3) shall expire on October 1, 2028 .
  • (10) Each agreement for a loan or loan guarantee executed by the Director under paragraph (3)(A) shall be conclusively presumed to be issued in compliance with the requirements of this section.
  • (11) In the case of a default on a loan or loan guarantee provided under paragraph (3)(A), the Director may exercise any priority of the United States in collecting debts relating to the default.
  • (12) In carrying out the capital assistance program under this subsection the Director may—
    • (A) enter into contracts, agreements, or other transactions with applicants for or recipients of capital assistance pursuant to which such applicants or recipients directly pay for the costs of third-party services provided to the Office in connection with transactions involving such applicants and recipients;
    • (B) procure temporary and intermittent services of experts and consultants in accordance with section 3109 of title 5 only for the purposes established under this subsection; and
    • (C) with the consent of another Federal agency, enter into an agreement with that Federal agency to use, with or without reimbursement, any service, equipment, personnel, or facility of that Federal agency.
• (f)
  • (1)
    • (A) The Director may—
      • (i) charge and collect fees for the costs specified in subparagraph (B) for services provided by the Office and associated with administering programs under this section, including project-specific transaction costs and direct costs relating to such services; and
      • (ii) establish those fees at amounts that the Director considers appropriate only to recover the costs of project-specific transaction costs and to offset the expenses of administering of those programs.
    • (B) The costs specified in this subparagraph are the following:
      • (i) Due diligence costs paid to third parties for services conducting national security, legal, engineering, technical, financial, and other due diligence on applicants, prospective and existing borrowers, guarantors, sponsors, and other key transaction parties, their respective owners, managers, and employees, and their properties, assets, and operations.
      • (ii) Costs of third-party services related to ratings analysis, underwriting, appraisals, valuations, travel to and inspection of project sites, and other customary analysis relating to specific applications.
      • (iii) Costs of third-party legal services for negotiation and documentation of transactions.
      • (iv) Costs of third-party services for monitoring, restructurings, and workouts of agreements.
      • (v) Administrative expenses directly related to credit program operations as defined in Office of Management and Budget Circular A–11 as of August 2025, including—
        • (I) the appropriate proportion of administrative expenses that are shared with non-credit programs;
        • (II) the cost of loan systems development and maintenance, including information technology systems costs;
        • (III) the cost of monitoring credit programs and private lenders for compliance with contractual requirements, laws, and regulations;
        • (IV) the cost of all activities related to credit extension, loan servicing, write-off, and close out; and
        • (V) the cost of collecting delinquent or defaulted loans.
  • (2)
    • (A) Amounts collected as fees under paragraph (1) shall—
      • (i) be deposited into the Credit Program Account established under subsection (e)(5); and
      • (ii) remain available until expended.
    • (B) Notwithstanding subsection (e)(5)(B), none of the fees collected under paragraph (1) may be used to pay salaries or expenses of civilian employees of the Department of Defense or for any purposes other than those described in this subsection or subsection (e)(12).
  • (3)
    • (A) Except as provided by subparagraph (B), the authority under paragraph (1) to charge and collect fees shall expire on the date specified in paragraph (9)(A) of subsection (e).
    • (B) With respect to a loan or loan guarantee provided under this section that is outstanding as of the expiration date under subparagraph (A), the authority of the Director under paragraph (1) to charge and collect fees for services relating to the loan or loan guarantee shall remain in effect for the duration of the loan or loan guarantee.
  • (4)
    • (A) Not later than March 1 of each year, the Director shall submit to the congressional defense committees a report that includes—
      • (i) a detailed summary of the fees collected under paragraph (1) in the preceding fiscal year; and
      • (ii) a description of how those fees were allocated.
    • (B) The Inspector General of the Department of Defense shall—
      • (i) conduct a review of the fees charged and collected under paragraph (1) in fiscal year 2026 and provide a report on the results of the review to the congressional defense committees; and
      • (ii) conduct an audit of the fees collected in fiscal years 2026 and 2027 and, once completed, provide a report to the congressional defense committees on the results of the audit not later than 180 days after the end of fiscal year 2027.
• (g) The Director may accept services, such as legal, financial, technical, or professional services, associated with administering programs under this section, including accepting such services as indirect payment in kind for services provided by the Office.
• (h) In this section:
  • (1) The term “capital assistance” means a loan, loan guarantee, or technical assistance.
  • (2) The term “covered technology category” means the following:
    • (A) Advanced bulk materials.
    • (B) Advanced manufacturing.
    • (C) Autonomous mobile robots.
    • (D) Battery storage.
    • (E) Biochemicals.
    • (F) Bioenergetics.
    • (G) Biomass.
    • (H) Cybersecurity.
    • (I) Data fabric.
    • (J) Decision science.
    • (K) Edge computing.
    • (L) External communication.
    • (M) Hydrogen generation and storage.
    • (N) Mesh networks.
    • (O) Microelectronics assembly, testing, or packaging.
    • (P) Microelectronics design and development.
    • (Q) Microelectronics fabrication.
    • (R) Microelectronics manufacturing equipment.
    • (S) Microelectronics materials.
    • (T) Nanomaterials and metamaterials.
    • (U) Nuclear fission and fusion energy technologies.
    • (V) Open RAN.
    • (W) Optical communications.
    • (X) Sensor hardware.
    • (Y) Solar.
    • (Z) Space launch.
    • (AA) Spacecraft.
    • (BB) Space-enabled services and equipment.
    • (CC) Synthetic biology.
    • (DD) Quantum computing.
    • (EE) Quantum security.
    • (FF) Quantum sensing.
    • (GG) Strategic maritime infrastructure.
    • (HH) Critical minerals and materials.
  • (3) The term “eligible entity” means—
    • (A) an individual;
    • (B) a corporation;
    • (C) a partnership, which may include a public-private partnership, limited partnership, or general partnership;
    • (D) a joint venture;
    • (E) a trust;
    • (F) a State, including a political subdivision or any other instrumentality of a State;
    • (G) a Tribal government or consortium of Tribal governments;
    • (H) any other governmental entity or public agency in the United States, including a special purpose district or public authority, including a port authority;
    • (I) a multi-State or multi-jurisdictional group of public entities; or
    • (J) a strategic alliance among two or more entities described in subparagraphs (A) through (I).
  • (4) The term “eligible investment” means an investment, in the form of capital assistance provided to an eligible entity, for a technology that—
    • (A) is in a covered technology category; and
    • (B) is not a technology that solely has defense applications.
  • (5) The term “obligor” means a party that is primarily liable for payment of the principal or interest on a loan.